If you want to make your sales quota, start by consistently managing a sales pipeline. That means ensuring that you’re doing enough prospecting to meet your sales goals, and, equally as important, working on the right kind of sales opportunities.
The first step in building a robust pipeline is setting realistic prospecting goals. A great way of doing this is to “reverse engineer” your sales goals into prospecting activity levels.
For example, let’s assume that you want to close $1,000,000 in sales next year. Start by calculating the number of deals you need to close in order to achieve $1,000,000 of sales. If your average deal size is $20,000, then you’ll need to close 50 deals in a year in order to meet your sales goal of $1,000,000.
Fifty deals a year, or slightly more than four deals per month, sounds easy enough, but now you need to translate that into actionable activity levels. That means analyzing data from your CRM system to determine your pipeline ratios.
What is your proposal to close ratio?
If your ratio is 2:1, then it’s obvious you’ll need to submit 100 proposals per year to close 50 deals and achieve your sales goal.
How many qualified meetings result in proposals?
If it is 3:1, then you’ll need to have 300 qualified meetings over the next year in order to submit 100 proposals.
The next calculation is the number of prospects you need to speak with in order to get 300 meetings. Let’s assume that your ratio of conversations with prospects to qualified meetings is 5:1. That means you need to have 1,500 conversations in order to get 300 meetings.
Now the big one: how many calls do you need to make?
Typical connect rates are 8:1 – i.e., eight call attempts for each connect. That means that you need to make 12,000 calls in order to have 1,500 conversations. That translates into 48 call attempts per day (assuming 251 business days in a year).
What salespeople often find by doing the prospecting math is that achieving their sales goals typically requires a higher than anticipated number of prospecting calls.
While most of us associate cold calling with prospecting, prospecting really means finding new business, irrespective of the source. Researchers have consistently found that sales professionals have a much higher success rate booking appointments with existing customers and referrals than with cold leads. Often the success rate is 3-4 times higher, depending on the industry. So to significantly increase your prospecting efficiency, take a shortcut: initially focus your prospecting time on existing customers and referrals.
Unfortunately, many sales professionals don’t ask for referrals enough or do not use the right technique. If you have a good relationship with a prospect or customer, here are a couple simple rules to remember about referrals:
This final technique is not really about expanding your sales pipeline, but rather improving its overall health through better qualification. Remember, your most precious resource is your time. A classic trap that sales professionals fall into is spending too much time with unqualified opportunities, while not spending enough time with highly qualified opportunities. So without carefully qualifying your sales opportunities even a seemingly full sales pipeline might not yield superior results.
Let’s assume that after 1-2 meetings you’ve determined that the opportunity satisfies the basic BANT (budget, authority, need, and timing) conditions. Is that enough? No. While BANT is a great starting point, it misses two fundamental issues that go to the heart of a qualified opportunity: (1) Is the opportunity worth pursuing in the first place? And (2) Can you win?
The criteria outlined below will help you assess whether a sales opportunity is worth pursuing. Typically, these criteria are best used after your first meeting where you’re uncertain or something just doesn’t feel right about the opportunity.
Assuming you’ve determined that your sales opportunity is worth pursuing, you’re now ready for the second question, can you win? The criteria below will help you assess your competitive position.
Sales success starts with building and maintaining a healthy pipeline starting with realistic goals that tie to your ultimate sales goals. A great way to productively use your prospecting time is to first focus on existing customers and referrals.
For many salespeople walking away from an opportunity, even a long shot, is a complete anathema. But remember, your sales success depends on making decisions on how best to allocate your time, including when to deem an opportunity as unqualified. So rather than mourn the loss of the opportunity (it likely wasn’t a viable opportunity in the first place), focus your efforts on your qualified opportunities and building your pipeline.